India’s consumer confidence highest among emerging markets: Credit Suisse

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India’s buoyant consumer sentiment was supported by consumers’ greater confidence in their current and future finances, as well as relatively lower inflation expectations.

India’s consumer confidence is highest compared to other emerging market peers despite the near-term sentiment being adversely impacted by the Centre’s demonetisation move, says a survey.

According to the Credit Suisse Emerging Consumer Scorecard, India has the highest consumer confidence score among the eight emerging markets surveyed — Brazil, China, India, Indonesia, Mexico, Russia, South Africa and Turkey — while China slipped to third place.

India’s buoyant consumer sentiment was supported by consumers’ greater confidence in their current and future finances, as well as relatively lower inflation expectations.

India saw strong improvement in personal finances expectations; a net 47 per cent of the respondents expect the state of their personal finances to improve over the next six months, up from 27 per cent in last year’s survey.

However, only 57 per cent of respondents thought it was a good time to make a major purchase, a sharp drop compared to 80 per cent last year.

“A further 10 per cent of surveyed households have succeeded in entering middle income territory in last three years. This creates a consumer base of 1.25 billion people across eight countries covered, confirming the significance of emerging consumer story and growth opportunity for investors,” said Richard Kersley Head of Global Equity Research Product and Thematic Research at Credit Suisse.

The report said combined effect of demonetisation and GST will help to drive the adoption of non-cash payment modes by consumers and will likely lead to acceleration in the switch to consumption of branded goods.

The government in November last year had announced the demonetisation of Rs 500 and 1,000 currency notes to crack down against black money and terror financing.

The survey also said, as the emerging market consumer has developed, local brands are increasingly  gaining leading market share in lucrative consumer segments previously the preserve of large global brands owned by Western multinational companies.

Source: http://economictimes.indiatimes.com/articleshow/57920862.cms

FIPB approves 9 FDI proposals worth Rs 659 crore

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Inter-ministerial body FIPB has approved nine investment proposals, including those of Netmagic Solutions and Vodafone, totaling a foreign investment of Rs 659 crore.

Inter-ministerial body FIPB has approved nine investment proposals, including those of Netmagic Solutions and Vodafone, totaling a foreign investment of Rs 659 crore. “Based on the recommendations of the Foreign Investment Promotion Board (FIPB) at its meeting held on February 21, the government has approved nine proposals involving FDI of Rs 659 crore and recommended three proposals for the Cabinet Committee on Economic Affairs (CCEA),” an official statement said. The FIPB, headed by Economic Affairs Secretary Shaktikanta Das, cleared proposals of Netmagic Solutions entailing an investment of Rs 534 crore and Vodafone India Rs 55 crore. It recommended proposals of Rs 750 crore of Apollo Hospitals Enterprise, Rs 900 crore of Star Technologies and Rs 789 crore of Flag Telecom Singapore Pte to the CCEA, it said.

The panel has deferred six proposals, including those of Gland Pharma, Crown Cement Manufacturing India Private and Powervision Export and Import India Private. It also said proposals of Hindustan Aeronautics, Spectrumlabs India Private and PMI Engineering Exports Private did not come to the FIPB as these were on the automatic route. The government has already announced winding up of the FIPB by putting in place a new mechanism, a move which will further improve ease of doing business.

Finance Minister Arun Jaitley, in his Budget 2017-18, announced the decision to abolish the FIPB, saying 90 per cent of foreign investment approvals are via the automatic route and only 10 per cent go to the board. The FIPB offers single-window clearance for applications on FDI in India that are under the approval route. The sectors under the automatic route do not require any prior approval and are subject to only sectoral laws.

India allows FDI in most sectors through the automatic channel, but in certain segments that are considered sensitive for the economy and security, the proposals have to be first cleared by the FIPB. With growth in FDI in important sectors like services and manufacturing, overall foreign inflows in the country rose by 30 per cent to USD 21.62 billion during the first half of 2016-17. FDI in the country rose 29 per cent to USD 40 billion in 2015-16 as against USD 30.94 billion in the previous financial year.

Source: http://www.financialexpress.com/economy/fipb-approves-9-fdi-proposals-worth-rs-659-crore/601389/

Forex reserves up $2.67 bn to $366.78 bn

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India’s foreign exchange reserves surged by whopping $2.671 billion to $366.781 billion for the week ended March 2017 on account of increase in foreign currency assets, the Reserve Bank said today.

In the previous week, the reserves had risen by $98.6 million to $364.109 billion.

Foreign currency assets (FCAs), a major component of the overall reserves, rose by $2.645 billion to $343.101 billion in the reporting week, the RBI said.

Expressed in US dollar terms, FCAs include the effects of appreciation/depreciation of non—US currencies, such as the euro, pound and the yen held in the reserves.

Gold reserves remained unchanged at $19.914 billion.

The special drawing rights with the International Monetary Fund was up by $10 million to $1.444 billion; India’s reserve position with the Fund, too, increased by $15.9 million to $2.320 billion, RBI said.

Source: http://www.thehindubusinessline.com/economy/forex-reserves-up-267-bn-to-36678-bn/article9600591.ece

NBFCs will show up better asset quality: Moody’s

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Non-banking finance companies could well outpace commercial banks, struggling to grow amid muted loan expansion and bad loan burden, said global rating company Moody’s.

But, NBFCs too are exposed to certain risks emanating from their fast-faced growth in loan against properties, which they are in a position to mitigate with larger share in mortgaged loans.

Non-bank financial companies (NBFCs) in India (Baa3 positive) will demonstrate broadly stable asset quality, but  delinquencies will likely rise over the next 1-2 quarters, as demonetisation adversely affects collections across asset classes, said Moody’s Investors Service in a note.

“While the 90+days delinquency rate in the commercial vehicle (CV) loan segment largely stabilized in the first half of the fiscal year ending 31 March 2017, such delinquencies should build up in the near term due to the adverse impact of demonetisation and tighter recognition norms for non-performing  assets (NPAs),” said Alka Anbarasu, a Moody’s Vice President and Senior Analyst.

Moody’s also notes that the growth in loans against property (LAP) has outpaced overall retail credit growth in recent years, but relatively loose underwriting practices–combined with intensifying competition – will translate into higher asset quality risk for this segment.

Furthermore, over the past 3 years, NBFCs have gained some market share in the origination of retail lending, on the back of the faster growth exhibited by such entities when compared to the banks.

This is particularly the case when compared to public sector banks, which face significant challenges on their asset quality and overall solvency profiles.

“Nevertheless, we expect that competitive pressures from the banking sector will remain intense as banks are increasing targeting of the retail segment to offset weakness in their corporate lending. In addition, retail lending, particularly housing loans, is more capital efficient for the banks,” said Anbarasu.

And, while the NBFCs’ capitalization levels are adequate, with average Tier 1 ratios in excess of 14%, capital generation will lag credit growth. Access to external capital will therefore be key in sustaining the NBFCs’ growth momentum.

On funding, Moody’s expects that the NBFCs’ funding profiles will broadly remain stable, and funding costs should moderate gradually, given the reduction in systemic rates.

In addition, the NBFCs’ profitability and capital, as well as funding and liquidity levels, will stay broadly stable.

The NBFCs are growing at a fast pace, and have gained market share in the origination of retail credit. And, their share of LAP pose a potential source of risk, with such loans growing at a rapid compound annual growth rate of about 25% over the last four years compared to 17% for overall retail credit.

Moody’s says that the NBFCs’ exposure to potential risks from LAP is broadly offset by their share of stable mortgage loans, because favorable demographics and economics, tax incentives for home loans and an increasingly affordable housing segment support asset quality.

Moody’s expects that the loss given default for both home loans and LAP will be limited, in light of the underlying collateral.

Source: http://economictimes.indiatimes.com/articleshow/57749011.cms

India Inc more analytics savvy than global peers

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There are a few aspects that are common to Indian organisations that have a successful analytics strategy in place.

Non-banking finance companies could well outpace commercial banks, struggling to grow amid muted loan expansion and bad loan burden, said global rating company Moody’s.

But, NBFCs too are exposed to certain risks emanating from their fast-faced growth in loan against properties, which they are in a position to mitigate with larger share in mortgaged loans.

Non-bank financial companies (NBFCs) in India (Baa3 positive) will demonstrate broadly stable asset quality, but  delinquencies will likely rise over the next 1-2 quarters, as demonetisation adversely affects collections across asset classes, said Moody’s Investors Service in a note.

“While the 90+days delinquency rate in the commercial vehicle (CV) loan segment largely stabilized in the first half of the fiscal year ending 31 March 2017, such delinquencies should build up in the near term due to the adverse impact of demonetisation and tighter recognition norms for non-performing  assets (NPAs),” said Alka Anbarasu, a Moody’s Vice President and Senior Analyst.

Moody’s also notes that the growth in loans against property (LAP) has outpaced overall retail credit growth in recent years, but relatively loose underwriting practices–combined with intensifying competition – will translate into higher asset quality risk for this segment.

Furthermore, over the past 3 years, NBFCs have gained some market share in the origination of retail lending, on the back of the faster growth exhibited by such entities when compared to the banks.

This is particularly the case when compared to public sector banks, which face significant challenges on their asset quality and overall solvency profiles.

“Nevertheless, we expect that competitive pressures from the banking sector will remain intense as banks are increasing targeting of the retail segment to offset weakness in their corporate lending. In addition, retail lending, particularly housing loans, is more capital efficient for the banks,” said Anbarasu.

And, while the NBFCs’ capitalization levels are adequate, with average Tier 1 ratios in excess of 14%, capital generation will lag credit growth. Access to external capital will therefore be key in sustaining the NBFCs’ growth momentum.

On funding, Moody’s expects that the NBFCs’ funding profiles will broadly remain stable, and funding costs should moderate gradually, given the reduction in systemic rates.

In addition, the NBFCs’ profitability and capital, as well as funding and liquidity levels, will stay broadly stable.

The NBFCs are growing at a fast pace, and have gained market share in the origination of retail credit. And, their share of LAP pose a potential source of risk, with such loans growing at a rapid compound annual growth rate of about 25% over the last four years compared to 17% for overall retail credit.

Moody’s says that the NBFCs’ exposure to potential risks from LAP is broadly offset by their share of stable mortgage loans, because favorable demographics and economics, tax incentives for home loans and an increasingly affordable housing segment support asset quality.

Moody’s expects that the loss given default for both home loans and LAP will be limited, in light of the underlying collateral.

Source: http://economictimes.indiatimes.com/articleshow/57749011.cms